More analysts with bubble warnings
Ok, this is all getting a bit weird. First we heard from bank economists, Flaherty and the PM – the general message tended towards caution: don’t buy what you can’t afford, make sure you can handle rising interest rates, we’ll keep an eye on the Canadian housing market to make sure it doesn’t get too bubbly, that kind of thing. Now we’ve got more warnings showing up in the mainstream press, but these are a lot more direct:
“If you’re somebody in a situation that you have only five per cent down and you’re stretching to get in the market with a 35-year amortization, I think that would be a very precarious situation right now,” said BMO Capital market economist Robert Kavcic.
Conversely, he said, “if you’re sitting on a pile of cash and looking to move into the real estate market, it would almost be a no-brainer to just wait for lower prices.”
Mr. Kavcic isn’t the only one in that article that thinks buying right now would be a mistake:
“It’s absolutely not debatable that housing prices cannot rise faster than incomes over the long term,” said Will Strange, professor of real estate and urban economics at the Rotman School of Management.
Sooner or later, incomes have to rise, or home prices fall, for balance to be attained.
Many analysts argue that home prices are not yet out of line with the incomes it takes to pay for them, Strange said. Yet with the job market still weak, and unlikely to drive new employment and higher wages, odds are that if something’s got to give, it will be prices.
“If I didn’t personally have most of my wealth tied up in housing, this would not be the time that I would choose to jump in,” Strange cautioned.
Now keep in mind these comments refer to the national Canadian real estate market where house price increases are starting to outpace incomes in many cities. Here in Vancouver things are different: house prices have been outpacing incomes for years.
January 11th, 2010 at 7:31 am 1
As Garth Turner said in his most recent post, we have learned nothing from last years finacial storm.
I guess it will take a direct slap in the face to get people to wake up.
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January 11th, 2010 at 8:46 am 2
I thought i'd take a moment to confirm Dave's assertion on an earlier thread. Halifax is nothing like Vancouver. It's much closer to Montreal.
From what I can tell, it's unusual for there to be multiple offers on a property. People commission professional engineers to do inspections. If the advice is the house needs work, that is taken into account when making an offer. Waiving conditions is unheard of here. Real estate isn't followed obsessively.
You can buy 3 nice downtown properties for about $750, which is now apparently the price ofone Yaletown condo. You can buy a nice semi detatched here in halifax's equivalent for as little as $140k.
It's a beautiful day here. It's bright and sunny and there's a light dusting of snow. It's about -2c but it's a dry cold so doesn't feel nearly as bone chilling as, say 6c with rain.
The more time I spend here the more I wonder why on earth anyone would sell his soul for a crappy Vancouver condo. There are a few vancouver ex pats here and none of them miss the city. I'm surprised that I don't either. I thought I'd spend at least a moment or two wondering if I made the right choice but so far I haven't spent a single moment regretting my choice.
There's lots of work out here, the winters are better, the housing stock Is better quality and it's affordable.
I'd advise anyone sitting on the sidelines waiting for things to get better in Van to consider leaving the city. I think you might find the much hyped Vancouver lifestyle isn't as good as the life you can afford elsewhere. Even if a housing correction happens it's going to be years before prices hit a trough. Why spend all that time waiting?
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January 11th, 2010 at 9:07 am 3
Yes as I said a few posts ago: Scullboy wants others to move out of Vancouver so that he can purchase property here on the cheap.
How do we even know he is really in Halifax and hasn't just moved to a basement suite in New West or something?
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January 11th, 2010 at 9:16 am 4
VLB
Less retard please.
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January 11th, 2010 at 9:50 am 5
Ya, I read that one recently, I too find all the warnings in the MSM weird. After all the fluff pieces and tiptoeing around the word bubble it's now out there almost daily.
I was on bnn.ca earlier reading some of their blogs, predictions for the year, Frances Horodelski had 10 things to watch in 2010, here's one I found particularly interesting:
"8. Bubbles, bubbles everywhere bubbles – but who has a pin? History is replete with investment bubbles and busts – but very rarely, if ever, has a bubble been seen by the consensus in advance. This time around there’s a bubble being detected around every investment corner. Detecting where the bubbles are (Canadian housing?) and how they get deflated will be one of the key stories for 2010."
You can read the rest here: http://www.bnn.ca/blog/blog.html
I like Frances as well as Pat Bolland. I just find the two of them to be objective. Or maybe it's Pat's moustache that does it, that stash is legend.
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January 11th, 2010 at 9:54 am 6
"“It’s absolutely not debatable that housing prices cannot rise faster than incomes over the long term,”"
The question is what is the long term? We certainly have seen prices increase over the last decade. I don't believe that incomes have followed suit. That's a pretty significant amount of time for an individual.
We've got a situation where the fundamentals and the prices just aren't even close. My concern is that the price increases and deviation from fundamentals have been going on for so long now that the prices are now "anchored" by the narrative of higher prices.
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January 11th, 2010 at 10:00 am 7
VLB
I'm flattered you think I have that kind of influence.
Honestly though, you're a typical Vancouver dimbulb. Does it occur to you at all that there is life outside your city? Have you even entertained the idea that a home should be a place to put your feet up or raise a family and should not be a ticket to wealth?
For the rest of you bears, consider vlb typical of the Vancouver mindset. He and others like him are about 75% of the reason the bubble hasn't burst. It's that total, blissful ignorance in the face of overwhelming evidence.
Vlb if I were going to buy anywhere it would be in Halifax. Honestly, you and the other bulls are funny. It is totally beyond your comprehension that life is just as good if not better somewhere else.
Oh yeah for the rest of you, I had an awesome meal of scallops and mushrooms on a bed of wilted spinach for lunch. Got the scallop for 6 bucks a pound!! Talk about a bargain!!
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January 11th, 2010 at 10:03 am 8
@scullboy:
I think Victoria is a good comparable for Halifax. They are of similar size and are both located on the ocean. A lot of your Vancouver criticisms don't apply to Victoria. Of interest, did you consider moving there? Housing is obviously more expensive in Victoria than Halifax, but less extreme of a difference from Vancouver. The climate in Victoria is also quite different from Vancouver. Halifax gets 50% more rain than Victoria and it is colder. Victoria gets the most sunshine hours of any major centre in Canada as well. The unemployment rate in Victoria is less than Halifax.
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January 11th, 2010 at 10:34 am 9
If I had to pick, Halifax or Victoria, it would definitely be Halifax. The never-ending gray sky here doesn't actually recommend the climate, to me, and of the two places, Halifax is more fun.
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January 11th, 2010 at 10:37 am 10
(Victoria does get more sunshine hours, but there's a distribution of light issue, around the calendar. Plus, snow is a wonderful reflector.)
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January 11th, 2010 at 10:37 am 11
Victoria is also overrun with the homeless, which is comparable to Vancouver.
Question: Can you actually walk a block in Halifax without getting asked for change? If so, that alone might be enough of a reason to move there.
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January 11th, 2010 at 10:47 am 12
Looks like housing starts were up 5.9% in December.
http://tinyurl.com/y96dljy
Keep bloating that inventory gang! It's just going to make the crash all the more spectacular when it hit. =)
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January 11th, 2010 at 11:14 am 13
Another reason not to live in Vancouver? Too many thrillkillers. How many citizens have died in the past twelve months. Are you next. Diasarm The RCMPsychos.
http://www.vancouversun.com/news/shot+police+dies…
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January 11th, 2010 at 11:22 am 14
@Dave: So sunshine is desirable and clouds/rain/cold are undesirable? Now tell me again why Vancouver should be more expensive than LA, San Diego, Las Vegas, Phoenix, Miami, etc.
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January 11th, 2010 at 11:49 am 15
13:
"Another reason not to live in Vancouver? Too many thrillkillers. "
——————-
"His injuries are not considered life-threatening." (from actually reading the article)
——–
Retard. At least read the article before splashing "killers" around.
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January 11th, 2010 at 11:53 am 16
@scullboy
My sister and brother left Vancouver about a decade ago after living here for several years. They've both settled down in much cheaper cities (Alburquerque and Montreal) and laugh at the suggestion of moving back here. They would never sacrifice their lifestyles to pay the high costs of living in Vancouver, especially now that they have families.
Lifestyle is more than beaches and mountains, especially for those with a family and little time to enjoy either.
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January 11th, 2010 at 11:57 am 17
I think it will take a national bubble to be recognized for this local one to pop. We were alone in this for way to long – now it's everywhere and the news cannot keep pretending it doesn't exist.
This is it.
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January 11th, 2010 at 12:17 pm 18
"Question: Can you actually walk a block in Halifax without getting asked for change?"
I lived there for a few years, and there was certainly a heck of a lot less begging – not that there's none (there were always window-washers at Quinpool & Robie during spring/summer). A major reason being, I think, that a fully homeless person literally wouldn't survive the winter there.
Personally I prefer BC's climate, but that's an individual thing. Certainly Halifax had a lot of positives going for it as well, in particular over Vancouver.
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January 11th, 2010 at 12:56 pm 19
Bank of Canada See No Housing Bubble:
<a href="http://www.canada.com/business/fp/Housing+market+bubble+says/2429324/story.html" rel="nofollow"> <a href="http://;http://www.canada.com/business/fp/Housing+market+bubble+says/2429324/story.html” target=”_blank”>;http://www.canada.com/business/fp/Housing+market+bubble+says/2429324/story.html
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January 11th, 2010 at 1:01 pm 20
G&M:
Bank of Canada won't raise rates to cool housing
….Mr. Lane said the bank understands the concern, but it uses its lending rate to keep inflation in check for the whole economy and the housing market is “only one of several factors” that influence inflation.
…Instead, he said, the government could increase capital requirements for lending institutions, adjust loan-to-value ratios and change the terms and conditions required to obtain mandatory mortgage insurance.
“These instruments can be targeted to risks to the entire financial system that stem from particular markets or institutions,” he said. “Ultimately, it is the Minister of Finance who is responsible for the sound stewardship of the financial system.”
Question: will Flaherty do it??
http://www.theglobeandmail.com/report-on-business…
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January 11th, 2010 at 1:03 pm 21
@Dave:
It never crossed my mind to move to Victoria. Friends of mine who live there are desperately trying to leave. Apparently it's difficult to find work there. I thought the city very shabby and overrun with homeless, drug addicts, panhandlers and undesirables when I visited.
Victoria seemed to have a lot of really stupid rules, too. That often happens in cities infested with civil servants. Don't get me started on Ottawa.
I was refused entry to a bar because I didn't have government ID. If you saw me in real life, you'd know I'm plainly not 18. 
That doesn't happen in Halifax.
Then there is the cost of housing and the "everyone wants to move here" factor. Victoria's fundamentals are just as insane if you ask me, and the residents are just as deluded. NOBODY in Halifax thinks it's the best place on earth, which makes it a much more desirable city ironically.
Then there's the art and cultural scene. Here in Halifax it's a mart of everyone's life. You can go to the Seahorse Tavern on Tuesdays and enjoy some incredible live music, and I'm not talking boring smooth jazz quartets hired to make your expensive dinner more palatable.
There are loads of galleries and shops where you can buy the most gorgeous things for a pittance. Last week I got a gorgeous brass floor lamp. The thing is in perfect order, at least from the 30s and in perfect order. Cost with tax – 30 bucks. Today I picked up 8 vintage champagne flutes with the Dalhousie University logo etched in silver – 6 bucks each. You'd never be able to find anything comparable on the West Coast.
And then there's the food! You have to be careful because some things are a lot more expensive here, but then you can get the most amazing artisan breads, cheeses and preserves dirt cheap. Lobster is going for 6 bucks a pound, as are scallop. I got 18 portions of haddock loin for 20 bucks the other day, and it was all perfectly vacuum packed and frozen.
I can buy amazing products directly from the farmers at the local farmer's market. It's bigger then Granville Market, and so successful they're building a whole new facility for it. That building will be the most environmentally friendly in North America when it's done.
Speaking of green power, recycling including composting is mandatory here. Once you figure out how the system works it's really quite easy and I've heard landfill waste has dropped by 60% since it's been implemented.
I must admit I find it amusing that you think proximity to Vancouver is a plus. It's one of those "There are places other then Vancouver?" perspectives.
I have seen 3 homeless people in total over the last 6 weeks and I work in the middle of the city. They were in better shape mentally then the homeless I've seen in Vancouver. They were at least able to form coherent sentences and were very polite. I don't mean that as a slam on Van's homeless. I simply mean to say many homeless in Vancouver are clearly unable to care for themselves due to mental illness and addiction problems, while the few homeless I met in Halifax were clearly "down on their luck" types.
I don't think stats like number of hours of sunlight or amounts of precipitation are helpful in describing the experience of living in a place. I find while there may be more precipitation here, I prefer colder, dryer weather and snow to the dampness and rain one sees 6-8 months of the year in Vancouver. I prefer the more even distribution of seasonal sunlight here to the fabulous summer light / brutal winter grey I experiences in Van.
There are drawbacks here like everywhere else. People can be very slow, especially in the service industry. Finding a decent hairdresser is a *nightmare*. Transit buses don't run as frequently. All in all though in terms of lifestyle / quality of life, I think you get the most value for dollars spent here in Halifax.
Disclaimer: This is my PERSONAL opinion. I make no empirical claim.
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January 11th, 2010 at 1:17 pm 22
@Mark Carney: Holy crap, now that David Wolf is at the BoC, he says everything is great?!
That's not how he felt in 2008 when he was at Merrill Lynch!
WTF?
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January 11th, 2010 at 1:20 pm 23
And still a bunch of people are buying… looking for rent i went to a townhouse complex in North Burnaby where the rent was slashed from 1400 to 1250 in a year and still have 3 places open. Also got an interview with a co-op in new west and they said that 2 people have moved out recently, one family we actually met since they hadn't been evacuated yet. They looked happy, but in couple of years when from 1200 rent they will realize that they pay double in mortgage. And of course they are FTBs over 45, so who is going to pay the house in 20 years? their kids probably.
The renting market is improving, it was sad in december, but now we bailed from couple of places only because we are lazy to commute 5-10 more minutes
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January 11th, 2010 at 1:27 pm 24
"First we heard from bank economists, Flaherty and the PM – …….. Now we’ve got more warnings showing up in the mainstream press, but these are a lot more direct:.."
Didn't surprise me a bit, especially with the timing that Olympics 2010 Doom is nigh.
It shows that birds of the same feather plot together. How else did the Wall Street, NAR, Greenspan and the media pull it off!
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January 11th, 2010 at 2:34 pm 25
I find it funny that you basement dwelling losers constantly complain about lifestyle on a blog online. Think about it for a minute you scum sucking losers. Yes I know I'm posting here too but I like my rich asian lifestyle… you on the other hand…
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January 11th, 2010 at 2:51 pm 26
Can you all end the pointless debate on which cities are better than others? It's subjective. Each of us has an opinion on what they like or dislike. Who cares if anyone agrees or disagrees with it?
Let's move on.
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January 11th, 2010 at 2:54 pm 27
RichA
Funny you don't look asian.
http://www.nytimes.com/2008/08/03/magazine/03trol…
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January 11th, 2010 at 3:00 pm 28
“It’s absolutely not debatable that housing prices cannot rise faster than incomes over the long term,”
Sure they can, with an increasing concentration of wealth. Eventually you get a class system with lords and paupers. Granted it doesn't make any kind of economic sense, but you can't put a price on feeling superior to everyone can you?
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January 11th, 2010 at 3:21 pm 29
rp
economics 101 suggests otherwise
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January 11th, 2010 at 3:27 pm 30
The feudal system where the term "landlord" originated from lasted several hundred years. There is simply no reason the same can't be said for the new feudal system that has been setup in Vancouver. There's two players in this new feudal system : me and you losers. Your role is to get me rich and complain about it online, mine is to cash the cheques and laugh at your plight with my friends. Everyone's happy!
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January 11th, 2010 at 3:34 pm 31
We seem to be following the US in that we are targeting mortgage rates through MBS purchases. But the US is supposedly different from our situation so their response to MBS purchases may be appropriate because they are trying to avert a depression 2.0. However, if all the assertions that we were more prudent and financially robust are correct, I am wondering if it would be been better for our economy to simply let housing correct itself to more reasonable levels. It seems the over reaction of lowering mortgage rates is going to produce exactly the same sort of housing crash here as in the US, just delayed, whereas simply letting our (supposedly) more robust RE market correct now would have allowed capital to flow into more productive areas early on so we would synchronize with the rest of the global recovery, rather than slump once the global recovery takes off.
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January 11th, 2010 at 3:39 pm 32
"richasian Says:
January 11th, 2010 at 3:27 pm
The feudal system where the term “landlord” originated from lasted several hundred years. There is simply no reason the same can’t be said for the new feudal system that has been setup in Vancouver."
—
Whatever, Retard. You may wish remember that the subjected in the medieval feudal system had no vote. People today do. Discuss.
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January 11th, 2010 at 3:43 pm 33
agreed- let's end this debate on which city is better than which. It's all up to your own tastes and desires.
I left here in 2005 to move to Dublin thinking I would never come back. Thought Dublin was the best city ever- for about 1 year. was never so happy as when i returned to Vancouver.
It's all about where you are in life and what you want. Right now I want a clean city with access to nature and North Van fits the bill.
This market just keeps getting weirder and weirder….all i can do is sit on the sides and scratch my head.
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January 11th, 2010 at 3:46 pm 34
@richasian:
Cash the cheques? Ya, right! Those $2M west side landlords are really getting wealthy with those $1,800 per month rent cheques. LOL. Yep, there’s the road to riches: buy something that costs you $7,000 per month and rent it out for 1,800 per month! Where do I sign up? Good Greif!
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January 11th, 2010 at 3:51 pm 35
To those who compare modern day "landed" people to those property-less serfs (renters). Here's a thought.
Being landed (owning land) in the middle ages meant two things.
1) You had land that generated income to help support you.
2) You had privileges and freedoms beyond what the non-landed classes enjoyed.
Today however land-owners;
1) Owe money on their land and much of their income from other sources goes into paying for their land.
2) Have less freedom than the renting class (cannot pick-up and move whenever they want) and fewer privileges (you must pay an extra tax we renters avoid).
So go ahead, turn it into a class system if you must, but which class is really on top in the modern world?
Now kneel before me debt-slaves! For I am your debt free master! Muahahaha!
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January 11th, 2010 at 4:01 pm 36
@Vansanity:
Can you all end the pointless debate on which cities are better than others? It’s subjective. Each of us has an opinion on what they like or dislike. Who cares if anyone agrees or disagrees with it?
——–
One of the tenets used to justify Vancouver’s ridiculous housing prices is that ‘everybody wants to live here’ The fact that people debate whether other places are better or not proves that the above tenet is false (just like all of the other, so called ‘fundamentals’ that supposedly justify why housing will stay high).
I’ll agree; I don’t really want to read location debates any more, but the debate is not pointless.
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January 11th, 2010 at 4:06 pm 37
If you have a mortgage, the bank is the land owner. You are a serf with no freedom but to work for decades to pay off your debt. If you have a 35-40 year amo, you may die without ever owning "your" land.
You are like the tennant farmers in india who owe so much that they will work the land for their lenders until they die and still not pay it off.
How much money you have left after income taxes, property taxes, repairs, maintenance and interst payments and inflated principal payments?
It is a mere fraction. You merely subsist like a serf. The vast majority of your labour benefits your masters in government and the bank.
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January 11th, 2010 at 4:11 pm 38
Shame on you for buying. Have you no self-respesct?
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January 11th, 2010 at 4:11 pm 39
@VRENGD:
I'm pretty sure that's just a myth. If it were true then I'd be forwarding my tax statements to the bank when prices crash and I get a place. If it's their land they can damn well pay the taxes.
Seriously though, you own the land, not the bank.
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January 11th, 2010 at 4:17 pm 40
You technically "own" the land. But miss a few payments and see who has the power to tell who to get off the property.
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January 11th, 2010 at 4:22 pm 41
There's no feudal system. 68% of Canadians own property.
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January 11th, 2010 at 4:47 pm 42
I drove along Lougheed in Burnaby today after not having been there in a long time. Holy crap is it overbuilt with housing in so many undesirable places. Who wants a townhome with the Skytrain and Lougheed in your front yard out in the burbs?
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January 11th, 2010 at 5:49 pm 43
richasian sounds too whitey, get a life scumbag
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January 11th, 2010 at 5:49 pm 44
chico, don't forget the Cactus Club!
yes, i know it's funny to see those Yaletown style towers with their coffee shops at ground level way out in BBY.
i don't know what people are thinking.
right now rental supply on NS is tight. Nothing really good available. What amazes me are the people who are still holding out for Olympic rentals to come in and save the day.
Look at all those places for rent on rentforthegames.com
the games are 1 month away folks, if you have not rented it by now do you think you will rent it at all?
when was the last time you booked flights, bought tickets to events and waited until the last minute to book your accommodation during a supposedly sold out event?
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January 11th, 2010 at 5:50 pm 45
43
nope – sounds too asiany, but yes, he should get a life
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January 11th, 2010 at 5:58 pm 46
@Anonymous:
No, what actually proves it false is that rents in Vancouver are about the same as in Calgary, Toronto, and Ottawa, which means objectively that people don't want to live in Vancouver any more than in those other places.
The metric of the utility (i.e. desirability) of any dwelling place is the market rent.
And one more time, living in Vancouver has logically nothing to do with buying property here. Many people make the connection illogically, of course, which is the problem.
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January 11th, 2010 at 6:14 pm 47
Bank of Canada backs off housing bubble talk
Raising interest rates could hurt entire economy
Monday, January 11, 2010
http://www.cbc.ca/canada/british-columbia/story/2…
I'm not surprised at all.
Bring on zero rates and Japan style economy
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January 11th, 2010 at 6:23 pm 48
@patriotz:
Wrong. There is plenty of utility in ownership. Have you ever spoken with a homeowner?
The rental market has less to do with desirability of this City than it does with other factors. Vancouver has been the most expensive City in Canada for about the last 25 years, while rents in each city have been comparable. I think that is a sufficient period of time to demonstrate that your assertion is incorrect. If not, then I can only assume you believe this market is in the midst of a 1/4 century bubble? If the latter, then how long should one wait it out? Another 1/4 century?
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January 11th, 2010 at 6:27 pm 49
@VRENGD:
You own the land. You get the rental income and capital gains (or loss).
The bank owns the mortgage, which is a loan secured by a lien on the land. It conveys no responsibilities or benefits of ownership on the bank unless and until it forecloses and obtains title.
If you think you don't really own the land, see who gets sued if someone gets injured on the property.
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January 11th, 2010 at 6:47 pm 50
@Dave:
I did not claim there is no utility in ownership.
The metric of utility of ownership is the market rent of the property, i.e. its earnings.
Some owner-occupiers may derive additional utility (what we call consumer's surplus), but there is no objective way to measure this. The purchase price is not an appropriate metric because it includes expectations of future sale price, i.e. speculation. That's not utility, that's a capital gain.
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January 11th, 2010 at 7:00 pm 51
patriotz says:
No, what actually proves it false is that rents in Vancouver are about the same as in Calgary, Toronto, and Ottawa, which means objectively that people don’t want to live in Vancouver any more than in those other places.
excuse me? was that a joke post or are you trying to be serious? even hard core bears aren't buying that crap.
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January 11th, 2010 at 7:11 pm 52
@stagnate: I don't consider myself a 'hardcore bear', but if people would rather live in Vancouver than Calgary, Toronto or Ottawa why aren't rents higher here? Shouldn't demand have driven rents up? You might think this city is more universally desirable than it actually is..
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January 11th, 2010 at 7:14 pm 53
@Olympigs:
BoC is acting correctly.
The problem is that interest rates for mortgage lending are artificially low due to government guarantees, not that interest rates on all loans are too low. Talk to a business person looking for financing to see what I mean.
The government has undertaken a policy of deliberately inflating house prices and it's not the BoC's job to combat this. It's their job to control consumer price inflation.
Solution of course is to get rid of government guarantees on mortgage lending and let rates and terms reflect true market risk. End Soviet-style central planning. It didn't work for them and won't work for us.
The job of opposing wrongheaded government policies belongs to politicians. And all citizens.
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January 11th, 2010 at 7:20 pm 54
Olympic exuberance and Vancouver RE market fantasies are joined at the hip, so we are following the Games with interest.
At the end of the Friday Free For All thread, 'Lilypad' linked us to an ABC News clip headed “Will the Winter Olympics Be a Bust?"
See here for link to the clip & a transcript -
http://tinyurl.com/yd7t9bx
Some excerpts -
“So guys, it’s an Olympic year (as it is now every couple of years!), the Winter Olympics are kicking off in Vancouver next month. … Contrary to the usual Summer Olympic promotional blitz, [there is] next to no fanfare surrounding these games. There is actually even advertising time still up for grabs, [which] is virtually unheard of. And so we wondered what exactly is going on.”
“There is no doubt that Vancouver is in the shadow of Beijing.”
“On the eve of an Olympics without readily bankable favorites and thus little if any buzz just weeks shy of the opening ceremonies, the Vancouver winter games could fall flat Stateside.”
“NBC says it could lose hundreds of millions of dollars on this year’s Olympiad with companies like Johnson and Johnson, GM, bank of American and Home Depot deciding not to buy ad time.”
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January 11th, 2010 at 7:22 pm 55
zalm, rents aren't the same, even by cmhc calculations. incomes in the various cities are probably similar, comparable rents would be a function of comparable incomes. when demand exceeds supply for land rents and real estate values become a function of what the demand can afford.
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January 11th, 2010 at 7:56 pm 56
@stagnate:
If you like you can use rent/income as a way of measuring the intangible desirability of a city – the higher it is the more desirable the city is, because the more non-shelter consumption people are willing to forego to live there.
And Vancouver would come out ahead of Calgary et al due to its lower incomes. But not by much.
The folly is to try to use some perceived desirability to justify prices being out of whack with rents. The desirability premium for prices should be the same, proportionally, as for rents. And so it was historically for Vancouver – a price/income of about 4 (also the case for California).
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January 11th, 2010 at 8:14 pm 57
"…and thus little if any buzz just weeks shy of the opening ceremonies, the Vancouver winter games could fall flat Stateside.”
Hmmm…Is it always about them?
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January 11th, 2010 at 8:30 pm 58
patriotz says:
The folly is to try to use some perceived desirability to justify prices being out of whack with rents. The desirability premium for prices should be the same, proportionally, as for rents. And so it was historically for Vancouver – a price/income of about 4 (also the case for California).
the distortion comes from the lack of sfh lots. the ratio drops the further you get from the ocean. perhaps more will look to take the rental discount over ownership-values will drop, rents will rise and a new equilibrium would establish. if you disagree, then i agree with dave, you're basically saying we're in a 25 yr. bubble.
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January 11th, 2010 at 9:04 pm 59
#29 @logic: Economics 101 is a collection of largely discredited example problems. If it were anything approaching a science, they'd bust out the differential equations and model things as dynamical systems. Instead you get these strange axioms like "rational expectations" which somehow make it all tractable to deductive methods. Well I'm sorry, but the real world doesn't work that way at all.
The fact that this continues into the second year and up to the level of policy making is truly frightening. How many classical economists can give a coherent explanation of how credit and reserves are created in the banking system? How many can't even explain bubbles like the one we are in, without resorting to some deus ex machina? I get the impression that economists just sit around and argue about the basics of how things work, with little or no empirical verification of hypotheses. It's better than nothing in the same way that alchemy is better than witchcraft.
The depressing fact is, people 80 years ago had a better understanding of the issues than we do today. Most economists are so busy grinding their own axes now that they can't be bothered to read what Keynes and Fisher actually wrote. I like economists such as Steve Keen, because their models actually bother include debt in the picture, but most of the discipline reeks of failure. Hopefully they will clean house and we'll get a science of economics that works, but given what has happened to the banking and accounting professions recently I don't have much hope.
The harder sciences like physics may have their comeuppance someday (just *look* at string theory), but for now economists are near the bottom of my dog heap as people who are not just likely to be wrong, but also dangerous to listen to. That will change if they start making sense.
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January 11th, 2010 at 10:37 pm 60
Are you feeling luck punk, say Flaherty. No bubble? C'mon, if the 'average price in vancouver is pushing a million and the average wage is under 70, how is this not a bubble?
http://www.financialpost.com/story.html?id=242932…
will they call it a crash if intrest rates go up by 1%when peoples monthly payments outstrip thier income? Ya thats right sucker, its YOUR fault
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January 11th, 2010 at 10:46 pm 61
Yeah most of economists are under institutional influance and there is a status in each country the way they should represent their opinions for that they always like to chose medium way but on this board you are free to represent cake without cream.
*This recent campain in Canada by bankers economists is nothing more than spin to convert tenants and owner into traders.
*If any of you know about trading it is popular in USA slowley slowley TD Canada Trust adopt it through Td ameritrade and Waterhouse now a day Scotia,Rbc,and Bank of Montreal bmo also entered into same gaiming tools.
What they want?
*The want people to use their trading service instead of buying ROCK SOLID VANCOUVER REAL ESTATE.
Why?
*Owners average monthly payment=$1500
Profit $3000-1500 payment=$1500
Tenants rent=1500
Adicted Traders monthly fee =$7000 profit and loss is unknown but fee is visible.
*These banks have start providing trading equipments when trading profit is down by billions of dollars and countinue to do so.
Common Sense
*When there is visible profit of $1500 on $1500 payment why not buy Vancouver Real Estate and Enjoy Your Life.
What Bubble?
*When Vancouver real estate emerged as leading real estate to rise through recession then what is bubble in the rising economy?
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January 11th, 2010 at 10:54 pm 62
Olympic rental market "oversupplied". Includes the classy advice not to plan your food budget around gouging foreigners.
http://www.vancouversun.com/travel/Olympic+proper…
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January 11th, 2010 at 10:55 pm 63
Bank of Canada says sees no housing bubble yet
When he was still in the private sector, in September 2008, Wolf had warned that the Canadian housing market was headed for a U.S.-style meltdown due to household finances that were in worse shape than in the United States or United Kingdom.
(Wolf's past statements have already been pointed out here…but this time it's Reuters saying it in a current article…RTP)
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January 11th, 2010 at 10:58 pm 64
@Boombust: Well, the States has been the biggest middle class market likely to come & spend money. If the Olympics are a PR campaign for Vancouver as suggested by many, than I imagine it does matter if Americans don't watch.
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January 11th, 2010 at 11:12 pm 65
@patriotz: Interest rates were down all over the world look for some other clue to get the fact straight that Vancouver real estate and Canadian real estate is REAL ESTATE anywhere else it is just a property like any other property like scullboys underpent and lingerie,toys etc.
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January 11th, 2010 at 11:16 pm 66
I love how the Bank of Canada says there's no bubble. At least they're consistent. I mean, if house prices increase 20% per year, and that's a bubble, then what can you say about a decade of 10-20% increases? Someone might say the Bank of Canada wasn't doing a good job. Of course they try to pin it all on Flaherty, who goosed the market with the CMHC. Granted, it is mostly his fault and the Conservatives will burn for this.
But Greenspan & Bernanke were rightfully blamed for blowing bubbles in the US. And their repeated dismissals, excuses, and lack of action has not endeared them to history. Carney should meet the same fate, if only for the same reasons. Does anyone even do their job anymore?
I see Harper is now talking about how our country is unstable while parliament is open, because all those other parties start questioning whatever his government does – like torture Afghanis. What a joke. Does this wannabe tinpot dictator even realize how he comes off?
http://www.vancouversun.com/business/Parliament+c…
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January 12th, 2010 at 1:17 am 67
Look for downpayments and amortization restrictions to be tightened in 2010. Will it slow down banks lending to anyone who can fog a mirror? Don't bet on it.
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January 11th, 2010 at 6:44 pm 68
[...] 11 January 2010 · Leave a Comment This from taylor192 at vancouvercondo.info 11 Jan 2010 11:53 am- [...]
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January 11th, 2010 at 7:10 pm 69
[...] This priceless juxtaposition of quotes posted by crabman at vancouvercondo.info 11 Jan 2010 1:17 pm [...]
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January 12th, 2010 at 3:38 am 70
Well of course that's just preposterous, even just looking at the Canadian average, or just Toronto, which amounts to about the same thing.
The song remains the same. Perhaps McLean's can create a Canadian "Person of the Year"?
As I said above it's not the BoC's job to attack the Cons' central planning of the housing market with interest rate increases that would cause huge collateral damage. However, they seem to be engaged in a collusion with the government (which they are supposed to be independent of in policy matters) to openly deny a housing bubble, which is something else and altogether contemptible. David Dodge was not shy of calling a spade a spade when the Cons brought out the 0/40.
But who should be surprised when we have our own Oliver Cromwell at 24 Sussex who despises any institution that is independent of his own whims.
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January 12th, 2010 at 6:22 am 71
“There is no doubt that Vancouver is in the shadow of Beijing.”
So…. the rich Asians in Asia end up screwing over the rich Asians in Vancouver?
Oh delicious irony, you taste like the finest Champagne.
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January 12th, 2010 at 6:54 am 72
@crabman: sounds like something to write to our reps about…
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January 12th, 2010 at 10:07 am 73
@ReadyToPop:
When he was still in the private sector, in September 2008, Wolf had warned that the Canadian housing market was headed for a U.S.-style meltdown due to household finances that were in worse shape than in the United States or United Kingdom.
——
Makes ya wonder if the BOC hired him so that they could muzzle him.
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January 12th, 2010 at 7:09 pm 74
"Makes ya wonder if the BOC hired him so that they could muzzle him."
Thanks for a good laugh.
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January 13th, 2010 at 2:14 pm 75
Whats with all the Halifax talk. Went to school there trust me it sucks! its cheap for a reason!
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